Limit down cases study : Coastal

I pick Coastal to follow-up the following trading day behaviour after the abnormal gap down on the Friday 21/June/2013. Indeed, as I predicted she will gap up till Limit Up, I did queue at 1.93, but did get any, I try to buy at 1.94 but the system does not allow me to, but don't know why later some trades can be down at 1.94. The next day 25/June, due to some hesitation to chase further as the market crashes badly on Monday.
If I were to queue at 1.94, again I cant get any, as she gap up to 1.98 before pressure back to 1.93 (2 sen above yesterday closing).

Anyway, she continue her climb and today she reaches back the Thursday (20/Jun/13) closing price, 2.10. So, now everything back to normal. Here you can see a 30% limit down, needs a 30% limit up with 2 more consecutive up day before she can recover to her original prices. Thats mathematics, down is faster than up.

Btw, RHB just upgrade her Fair Value to RM3.00. The reason being given by them is as follow

"The Edge Financial Daily reported today that Coastal Contracts (COCO) is acquiring its first jack-up drilling rig for USD200m (MYR641m). Assuming an 80:20 debt-to-equity ratio, COCO’s balance sheet will be leveraged up to some 0.46x net gearing based on its latest quarterly numbers. Given the change in the company’s earnings dynamics, we upgrade the stock to a BUY from NEUTRAL, as we raise the PE ratio from 8x to 10x. Our FV is thereby nudged up to MYR3.00 from MYR2.33.
The article mentioned that COCO will only take delivery of the jack-up rig in 2H14 (likely end-3Q14). "


Rei comment :

I got the meaning from the article is the recurring income will only starts improving around 3Q14 but now is only 2Q13, hmmmm...so she "may" only start to climb towards her targeted price around Mid/2014 ???

Anyway, I'm putting a more conservative approach, my intrinsic calculation (reduce from my last blog up due to her dwindling quarterly earnings) is around RM2.21.


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